A government decides to increase its spending by $1 million to boost economic activity. Which of the following statements best classifies the effect of this increase in spending according to Keynesian economics?

According to Keynesian economics, an increase in government spending, like the $1 million mentioned, can lead to a larger overall increase in economic activity. This happens because when the government spends money, it creates jobs and income for people who then spend that money on goods and services. For example, if the government hires workers to build a new school, those workers will earn wages and likely spend that money on food, clothing, or entertainment. This spending creates more demand in the economy, which can lead to businesses hiring more workers or increasing production. In this way, the initial $1 million spent can have a multiplied effect on the economy, stimulating growth beyond just the original amount.